1. Field of Invention
The present invention relates generally to the field of conducting on-line auctions over a computer or communication network, such as the Internet. More particularly, the present invention relates to a system for randomly varying the time period of an auction on the Internet.
2. Discussion of Prior Art
Traditionally, auctions have provided a desirable and exciting marketplace for the buying and selling of products. Typically with auctions, there is the possibility of an individual participating in the auction obtaining a product at a very competitive price. At the same time, the seller always has the possibility of obtaining higher than expected value. Since the auction entails multiple people bidding for a product, the goal of the seller and auctioneer is to increase the probability of obtaining the highest possible bid.
Drawbacks to auctions, however, include restrictions on participation based on an individual being required to attend the auction in person and actively place a bid on a product of interest. Secondly, participants are required to have enough funds at the time they attend the auction. These restrictions may hold down the final price of an item for sale.
Recent innovations such as high speed computers, e-mail and the Internet have made it possible to conduct on-line auctions where individual bidders place their bids in real-time from a remote computer location via the Internet before or during a bidding section. Details of products to be auctioned are posted on an auction site computer and are available to bidders and sellers via the Internet. Several on-line auctions such as Housing Urban Development (HUD(copyright)), Ebay(copyright) and On-sale(copyright) allow bidders to register and submit bids through the Internet. Items for sale and bid information are displayed on the bidders remotely located terminals. Bid information may include a description of items for auction, last bid, date auction ends, date auction started, sellers information, current number of bids, etc. Typically the auction runs for a period of several days or weeks before allocating the item for auction to the highest bidder.
Most auctions are announced with an exact end of auction time. Sealed bid auctions typically have a firm deadline so that the winner(s) is (are) selected from bids that were received before the predetermined deadline. In other auctions, the bidding goes on until a known end time and the winner(s) is (are) determined according to pre-fixed rules. While in traditional auctions the predetermined end time may not present any particular problem, on the Internet this feature introduces undesirable side effects. Firstly, due to very heavy traffic close to the end of an auction with multiple terms, bidders may not be able to access the current bid amount, and may not be able to revise their bids accordingly. Secondly, bidders sometimes wait until the last moment and then enter a bid that is sufficient for winning. Bidders prefer to wait, fearing that competitors may raise the bid amount even higher or sometimes they forget to return to, the auction. As a result, sellers often do not realize the optimum selling price for their items.
The prior art in this art area is exemplified by the following-patent which describes a system and method of conducting a multi-person interactive on-line auction which terminates the auction from further bidding and notifies the winning bidders and losers as to the auction outcome that is based on elapsed time since the start of the auction and bidding history of the auction.
U.S. Pat. No. 5,835,896, issued to Fisher at al., discloses a method and system for processing and transmitting electronic auction information. The system allows a group of bidders to interactively place bids over the computer or communication network. Based upon a predetermined time, a period of no bidding activity or when a desired sales volume is reached, the system closes the auction from further bidding and notifies the winning bidders or losers of the auction outcome. However, this patent makes no mention of the system selecting a random auction end time. The limitations identified above may result in a final price that is lower than what the seller could have obtained otherwise.
The present invention overcomes the drawbacks of the prior art by providing a method and system for selecting a random auction end-time. The system allows a seller to set a desired end-of-auction time, and based on such setting, the system generates a random end time for the auction by picking an auction duration from a probability distribution, so that bidders never have any preference over the time of bidding.
The present invention provides a smooth ending system for an auction on the Internet. Furthermore, the system randomly selects an end time for the auction by picking an auction duration from a probability distribution, so that bidders have no preferences over the time of bidding. At any given time, assuming that the auction is still in process, there is a fixed probability, independent of the time that has elapsed since the beginning of the auction, that the auction will end within the next time unit. Furthermore, the system prompts the seller to indicate or set a desired expected duration d of the auction. The system then proceeds to picking a pseudo random number r 0 less than r less than m where m greater than  greater than 1. The system calculates D according to the formula D=xe2x88x92d In (1xe2x88x92r/m). Auction begins at time t and finally the system determines end time of auction according to t+D.